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Monopolistic Unions, Brainard Uncertainty, and Optimal Monetary Policy

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Henckel, Timo

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Some authors have argued that multiplicative uncertainty may benefit society as the cautionary motive reduces the inflation bias. However, when there are nonatomistic wage setters, higher multiplicative uncertainty may raise the wage premium and unemployment and thus reduce welfare. Furthermore, since central bank preferences also affect the wage premium, delegating policy to an independent central banker with an optimal degree of conservatism cannot deliver a second-best outcome.

dc.contributor.authorHenckel, Timo
dc.date.accessioned2015-12-08T22:09:36Z
dc.identifier.issn1464-3812
dc.identifier.urihttp://hdl.handle.net/1885/29109
dc.description.abstractSome authors have argued that multiplicative uncertainty may benefit society as the cautionary motive reduces the inflation bias. However, when there are nonatomistic wage setters, higher multiplicative uncertainty may raise the wage premium and unemployment and thus reduce welfare. Furthermore, since central bank preferences also affect the wage premium, delegating policy to an independent central banker with an optimal degree of conservatism cannot deliver a second-best outcome.
dc.publisherOxford University Press
dc.sourceOxford Economic Papers
dc.subjectKeywords: central bank; economic theory; inflation; monetary policy; monopoly; uncertainty analysis; unemployment; wage determination
dc.titleMonopolistic Unions, Brainard Uncertainty, and Optimal Monetary Policy
dc.typeJournal article
local.description.notesImported from ARIES
local.identifier.citationvolume62
dc.date.issued2009
local.identifier.absfor140212 - Macroeconomics (incl. Monetary and Fiscal Theory)
local.identifier.ariespublicationu9807482xPUB62
local.type.statusPublished Version
local.contributor.affiliationHenckel, Timo, College of Asia and the Pacific, ANU
local.description.embargo2037-12-31
local.bibliographicCitation.issue2
local.bibliographicCitation.startpage307
local.bibliographicCitation.lastpage322
local.identifier.doi10.1093/oep/gpp011
dc.date.updated2016-02-24T12:13:03Z
local.identifier.scopusID2-s2.0-77953248653
local.identifier.thomsonID000276687400005
CollectionsANU Research Publications

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